Global equity markets fell for a second consecutive month in October (MSCI World -0.8%). Tech stocks weighed on performance (Nasdaq 100 -6.6% MoM) as disappointing 3Q26 earnings from a few tech companies rattled investors. Intel (-45% MoM, including a 29% one-day post-results drop) gave back part of its 278% 1H26 gains after its 4Q26 revenue guidance fell well short of consensus and its CFO warned that high memory chip prices would weigh on PC demand until 2028. Meta (-15% MoM) slid as investors questioned the pace and payback of its AI spending after it raised FY26 capex guidance to US$135bn–US$145bn and launched a US$25bn equity raise. Alphabet (-18% MoM) cost the S&P 500 1% of performance, losing 13% in a one-day post-results drop after it reported an earnings miss primarily driven by a US$8.7bn paper loss on its SpaceX stake. A second consecutive quarter of negative free cash flow (-US$9.1bn) and unchanged capex guidance of US$195bn–US$205bn deepened concerns about Alphabet’s AI spending. US value shares (Russell 1000 Value +4.4% MoM) were the best-performing cohort, significantly outperforming growth shares (Russell 1000 Growth -6.1% MoM), with October’s drawdown leaving the latter flat YTD.
Emerging market (EM) shares (MSCI EM -8% MoM) also had a tough month. Semiconductor companies (c. 25% of the index) shaved 3% off the index performance, falling 12% MoM in aggregate. Brazilian stocks (Bovespa -10% MoM) also weighed on EM performance as left-wing incumbent Lula da Silva defied expectations to win a fourth term, defeating conservative Flavio Bolsonaro, son of convicted former president Jair Bolsonaro.
October saw little progress towards ending the US war with Iran, while renewed Iranian attacks on oil tankers and the threat of further US military action pushed the price of Brent crude oil 14% higher MoM. Despite the elevated oil price, expectations for US Federal Reserve (Fed) rate hikes softened slightly, allowing the US government’s borrowing rate to end back below 5% (4.9% p.a.). The Fed and the European Central Bank (ECB) kept policy rates on hold, as largely anticipated. French student protests that began in September broadened into a movement against rising living costs, compounding deteriorating fiscal dynamics that saw Fitch place the country’s credit rating on negative outlook. French 10Y government bond yields climbed above US 10Y government bond yields for the first time since the Eurozone sovereign debt crisis c. 15 years ago, while the euro fell 1.5% MoM against the US dollar. The greenback had a mixed month, strengthening against c. two-thirds of major EM currencies but weakening against the Swiss franc, Canadian dollar and the British pound.
